What exactly is a Homepath Mortgage?

Tuesday, April 26, 2011

Fannie Mae's HomePath

As an answer to the real estate and mortgage crises starting in 2007, The HomePathMortgage Program was designed to assist people in purchasing a Fannie Mae owned property. HomePath offers a variety of flexible mortgage terms, no lender required appraisals, no PMI or monthly mortgage insurance, down payments starting as low as 3%, and allows for expanded seller contributions to cover all or part of the buyer’s closing costs. The HomePathMortgage Program is available for home-buyers who intend to make the property their primary residence or as an investment property. This program is available in all 50 states specifically for Fannie Mae owned properties.

The HomePath program was set up to promote the sale of real estate owned (REO) by Fannie Mae. Fannie Mae, also known as the Federal National Mortgage Association, is a privately owned company regulated by the U.S. government that helps provide mortgage funding for millions of Americans. HomePath.com has been in existence since 2000 to list for sale homes owned by Fannie Mae. The website shows homes available and lists approved real estate agents familiar with the Fannie Mae bidding system and special financing programs. These programs are open to home buyers and investors.

Mortgages for Owner-Occupants

For home buyers that will live in their Fannie Mae-owned home, the HomePath mortgage program provides more lenient terms than a typical conforming mortgage. The down payment amount can be as low as 3 percent. HomePath mortgages do not require an appraisal or mortgage insurance. Periodically, Fannie Mae offers concessions in the form of closing cost assistance and on special occasions, they have contributed as much as 3.5% of the home price toward the buyer’s closing costs. Currently Fannie Mae has implemented their FirstLook Marketing Period.

Fannie Mae's innovative First Look marketing period contributes to neighborhood stabilization by encouraging home ownership. During this period, owner occupants who occupy the home as their primary residence, some non profits, and public entities and their partners can submit offers and purchase properties without competition from investor offers.

The First Look period is typically the first 15 days a property is listed on HomePath.com, except Nevada where it is 30 days. Properties within the First Look period include a countdown clock on the property details page, which displays the number of days remaining for negotiation with eligible purchasers.Investor offers submitted after the expiration of the First Look period will be considered along with all other offers.

Mortgages for Investors

HomePath mortgage programs are also open to investors buying properties listed on HomePath.com. Investors are required to pay 10% of the home price as a down payment. Investors can buy up to 10 HomePath-listed homes using the financing plans. The no appraisal and no mortgage insurance terms also apply.

Fixer-Upper Mortgages

For HomePath.com-listed homes that require repairs before they can be occupied, Fannie Mae offers HomePath Renovation Mortgages. Homes that qualify for the fixer-upper loans are annotated as such on the website. A renovation mortgage will be made for a larger amount than the cost of the home to pay for the necessary repairs and refurbishment. Both owner-occupants and investors can qualify for HomePath Renovation loans.

Credit Qualifying

You may qualify for a HomePath mortgage even if your credit score are less than perfect. Request a Free Credit Analysis and see what your authorized HomePath Lender can do for you.

Down Payment

The down payment could be as little as 3% of the price of the home. Unlike conventional mortgages, the down payment for a HomePath mortgage can be financed from many sources besides your own funds; for example, a gift, a grant, or a loan from a nonprofit organization, your employer, or a state or local government.

Appraisal Requirement

The home you want to buy will need to be appraised (a process to determine whether it is worth as much as you plan to pay for it), but you will not be required to pay for the appraisal, a savings of several hundred dollars.

Loan Terms

HomePath mortgages can be variable rate or fixed rate. Some HomePath mortgages are interest only; that is, you pay the interest on the loan, but do not pay down the principal.

PMI or Private Mortgage Insurance

You may qualify for a loan without paying mortgage insurance. FHA and Conventional lenders usually require you pay an upfront mortgage insurance, which costs about 1% of the cost of the loan amount if your down payment is less than 20 percent and can also carry a monthly mortgage insurance premium of as much as an extra 1.15%. Not having to pay mortgage insurance could save you thousand of dollars over the life of the loan. HomePath Mortgage allows a borrower to purchase a Fannie Mae-owned property with a low down payment, flexible mortgage terms, no lender-requested appraisal and no mortgage insurance. Expanded seller contributions to closing costs are allowed.